By Stephanie Tonneson
As of October 2020, the success rate of projects on Kickstarter — one of the most popular crowdfunding sites — is about 38%. This means that, out of the half a million projects that have been launched on the site, over 300,000 were not successfully funded.
So what did the creators of the ~200,000 successfully funded campaigns have that creators of the unsuccessfully funded ones did not? A pre-existing following, according to world-famous marketer Seth Godin, which is why, he writes, the site “could be more accurately called Kickfinisher.”
Selling an idea is, itself, an attractive idea, and it’s true that early-stage funding isn’t going anywhere (despite what you may think, its popularity has actually increased during the pandemic). When it comes to product launches, though, recent data from ZoomInfo shows that investors are more likely to behave like Kickstarter crowdfunders: They want proof of your product’s success.
Funding typically follows product launches, not vice versa
Early-stage funding receives a lot of hype, but how common is it, really, when it comes to products that haven’t been built yet? According to Charles Hudson, founder and manager at seed-stage firm Precursor Ventures, it’s possible but “very, very difficult.”
ZoomInfo has found that funding is 22% more likely to occur after the launch than before the launch. A quick look at some other product launch stats explains why:
- 45% of product launches do not occur on time
- Only 11% of companies reported that their products met all internal launch targets
- While team collaboration is the single most important factor in a successful product launch across industries, fewer than 20% of companies see their product managers as improving collaboration within the company.
With a majority of companies struggling to run successful product launches, it seems logical that VC firms would hold out on providing funding until afterward.
Another interesting data point reveals that the more time between funding and a product launch, the more common it is for funding to precede the product launch. Specifically, this trend starts to show up above the 200 day mark, and the overall number of launches steadily increases along with it.
This data suggests that the more time VC firms have to witness a product launch’s success, the more often they will provide funding to support that product.
Additionally, the distribution of product job titles in 2020 may also reflect the increasing difficulty of product launches. ZoomInfo found that there are over twice as many people working to market and manage a product than there are developing it.
Could this be an effect of the challenge to launch successfully or a perpetuating factor?
It’s not about your product, though — it’s about you
The difficulty in attaining funding before a product launch might seem discouraging. This Mckinsey & Company survey on the topic, however, “showed no correlation between the amount invested in a launch and the rate of the success.”
Among the top driving factors of a successful product launch are team collaboration, market insights, planning upcoming launches, and growing talent — all things that would help prove to a VC firm that the success of your launch is not just about the product: It’s about the team that made it happen.
Stephanie Tonneson is a content writer & storyteller at ZoomInfo, serving you people-driven insights from the latest data & trends.
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